UK consumer confidence is at an all-time low after the global corona virus pandemic – and surprisingly, it has made consumers and entrepreneurs equally cautious.
With the lifting of the block and the reopening of certain companies, consumer confidence in the UK has dropped to -36, three points less than the record -39 record during the 2008 financial crash. This emerges from studies conducted between May 20 and 26 for the Consumer Confidence Barometer from the Growth of Knowledge (GfK) – and it is not the only survey of its kind. The results are given the uncertainty about the current and future The economic climate may not be surprising, and it seems that people's perception of their own financial situation has as much impact as people's optimism about the recovery of the economy. During the closure and even the transition to the new phase, the hospitality and food and beverage sectors were particularly badly affected. But how can companies find a balance and what role could the sector play in improving consumer confidence if consumer habits are still changing and people are slowly adapting to the new way of life?
A balancing act
"Throughout the ban, it was clear that the hospitality sector was hit hardest, especially those who relied solely on the over-the-counter retail channel, which fell to zero overnight," said JP Then, founder of Slerp and Crosstown donuts, tell us.
“The sector now has to balance two opposing elements. On the one hand, you have the pent-up demand from people who want to visit their favorite restaurant or cafe after months of restriction. While on-demand and delivery have made a huge contribution to digitally connecting companies to their audience, there is still a natural desire for people to eat out and experience things.
“On the other hand, you have understandable nervousness from people when things return to the appearance of the new normal.
“I firmly believe that the community wants to support the sector because we are inherently part of the community structure. It is up to us as the operator to provide the space and functionality that give people a sense of security but are also fun. This is more difficult to predict because it depends on many individual circumstances such as the size of the space, the layout of the retail store and the resources. However, I expect consumer confidence to build over time. "
Lockdown has certainly brought about a seismic shift in consumer behavior, from the type of items people buy to the platforms through which they buy them. Another change we've seen is spending habits, where many customers spend only on the essentials and others are increasingly concerned about value for money.
While the financial situation of individuals may become more stable, surveys have shown that most people are less confident about the overall economic situation. Given that many consumers believe that the coronavirus pandemic will have a lasting impact on the economy, spending may still stagnate as consumers become increasingly price sensitive, especially when vacation time is reduced.
According to a current one Consumer survey from a consulting company McKinsey & Company38% of UK respondents strongly agreed that they should be very careful about how they spend their money after the pandemic, while 40% said they would cut spending in the future.
This is an interesting perspective for the food and beverage industry. Where people have usually spent disposable income on items billed as luxury goods, such as artisanal and fine foods, people are now focusing on the essentials and perhaps on occasional treats.
With many Brits still working from home and restrictions still in place, takeaway sales in online retail and snack and beverage brands can increase and new opportunities can emerge.
Strategy could prove to be the key here, like Theadora Alexander, co-founder of Young foodies and from Powerfully small, a new online retailer for small, independent brands, said: “The F&B sector needs to be very important to restore consumer confidence in packaged food. There is no doubt that in times of recession, consumers will focus again on value for money instead of focusing on costs. There are examples from previous recessions in which premium supermarket goods performed well. However, there is a difference between a demonstrable value premium for the consumer and a premium for the sake of the premium.
"Affected companies should take this as an opportunity to make their difference clear to consumers," says Theadora. "It is a moving reminder for founders and business owners to reflect on themselves. Use this time to explore, identify and strengthen the role of your brand in the market and to demonstrate your USP and your particularity."
Trust your brand
When it comes to consumer confidence, keep in mind that consumers not only want to think about the economy in general, but also want to have confidence in the retailers, brands, and producers they spend money with. For this reason, JP emphasizes that it's also about having confidence in yourself as a brand and accepting change: “I think there are two important pieces of advice that I would give other companies that are concerned about consumer confidence. The first is to maintain close communication with your employees and customers at all times. Be transparent about your thinking and how this has led to initiatives and guidelines that you have implemented. Customers respond well to honesty and transparency, and this in turn makes a significant contribution to making their experience feel safe and comfortable.
“The second is that companies really need to use this time to think outside the box, be agile and try something new. It's hard to figure out that doing nothing and waiting for things to get better can be more harmful than trying something completely new. In many ways, we operators have a completely free passage to break the norm for the new norm – when else do you literally have nothing to lose, because if you stand still, you still lose?
“The only certainty for people in the industry right now is that it's very uncertain – we have to adapt and be creative, not stagnate. New initiatives may not be part of the original plan, but most customers will be receptive to new things, even if there is a feeling of "testing and learning" – and this opens up opportunities for companies. This is where communication becomes so important again, because trusting why you are doing something creates trust.
"We saw Slerp first-hand, where we helped companies of all sizes switch to on-demand and delivery, many of them for the first time that consumers were open to change."
It may feel like a challenging time, but in order to grow your business it is important to consider what options are available to you to strengthen the brand and increase your market share.
"Retailers should continue to offer high quality products that are good value for money," says Theadora. “By working closely with smaller, more agile, and more innovative suppliers, they can build a more compelling range of products that will gain a foothold and drive the changeover. Second, retailers should inspire and engage shoppers to improve the store experience. After talking to the big supermarkets about it, I know that they are fully invested in this approach and are looking for ways to make visits more interesting.
JP added that this is now the perfect opportunity for companies to adjust their strategy: “Accept that this is a testing and learning phase – take the opportunity to be brave.
“When we help companies move through Slerp and trade through an on-demand and delivery channel, we also work with operators on a number of things to make sure it is as efficient and effective as possible.
“For example, companies can offer a more refined menu, as too much choice can be discouraging for customers, especially in the first few weeks after reopening. In the same way, companies can change their menu more often, which means people keep coming back when that trust builds up.
“Moving set menu bundles is also a great way for companies to control operational efficiency and achieve better margins.
“Although companies will rightly welcome the reopening steps and many customers are looking to take advantage of the dine-in experience, we firmly believe that the shift to online ordering will continue. We have seen firsthand from the operators we work with that the success they have seen in this channel is something they want to maintain, even when their doors are open again. For this reason, it's also a good idea for businesses to choose items that travel well and ensure that you invest in packaging to continue to support those who want a delivery or take-away meal. "
If the blockage subsides, it will undoubtedly be interesting to see how consumers' appetite for return on spending is when buyers adjust to a world of social distancing and the seismic shift to online shopping. The future could be fruitful for local retailers, small brands and UK manufacturers taking the right measures to ensure consumer confidence.
"British consumers today prefer small and local retailers more than ever, which is really good news for independent businesses, including farm shops, delis, and convenience stores," said Theodora. “We welcome it, celebrate it and hope it stays that way. It is ironic that COVID-19, as tough as the economy may be, has actually brought local businesses five years ahead in customer retention. The channel is undergoing massive growth and although part of it is waning, they will now be in a much better position than in recent years. "
JP confirms this assessment: “One positive result that has become clear in all of this is that consumers want to buy local products and support independent companies. There was a real movement in that direction, a feeling that people were rediscovering their local communities and helping them in this situation. People may not have been aware of their local operator's quality products and offerings in the past, but I think understanding is there now. I firmly believe that this movement will stay here, which independent retailers will surely make a good contribution to the future. "